8 GoldPure is considering the following independent, average-risk investment projects: Project Size of Project Project IRR Project V P1.0 million 12.0% Project W 1.2 million 11.5 Project X 1.2 million 11.0 Project Y 1.2 million 10.5 Project Z 1.0 million 10.0 The company has a target capital structure that consists of 50 percent debt and 50 percent equity. Its after-tax cost of debt is 8 percent, its cost of equity is estimated to be 16.5 percent, and its net income is P2.5 million. If the company follows a residual dividend policy, what will be its plowback ratio? Group of answer choices 0 54% 68% 100% 32% 12% 66%
8 GoldPure is considering the following independent, average-risk investment projects: Project Size of Project Project IRR Project V P1.0 million 12.0% Project W 1.2 million 11.5 Project X 1.2 million 11.0 Project Y 1.2 million 10.5 Project Z 1.0 million 10.0 The company has a target capital structure that consists of 50 percent debt and 50 percent equity. Its after-tax cost of debt is 8 percent, its cost of equity is estimated to be 16.5 percent, and its net income is P2.5 million. If the company follows a residual dividend policy, what will be its plowback ratio? Group of answer choices 0 54% 68% 100% 32% 12% 66%
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 16P
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Question
8
GoldPure is considering the following independent, average-risk investment projects:
Project Size of Project Project IRR
Project V P1.0 million 12.0%
Project W 1.2 million 11.5
Project X 1.2 million 11.0
Project Y 1.2 million 10.5
Project Z 1.0 million 10.0
The company has a target capital structure that consists of 50 percent debt and 50 percent equity. Its after-tax cost of debt is 8 percent, itscost of equity is estimated to be 16.5 percent, and its net income is P2.5 million. If the company follows a residual dividend policy, what will be its plowback ratio?
Project Size of Project Project IRR
Project V P1.0 million 12.0%
Project W 1.2 million 11.5
Project X 1.2 million 11.0
Project Y 1.2 million 10.5
Project Z 1.0 million 10.0
The company has a target capital structure that consists of 50 percent debt and 50 percent equity. Its after-tax cost of debt is 8 percent, its
Group of answer choices
0
54%
68%
100%
32%
12%
66%
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